Arizona regulators to study data centers impact on electric grid
Utility regulators in Arizona plan to look into the ways the influx of data centers in the state is affecting the electric grid.
Arizona Corporation Commission Chair Kevin Thompson began the review of data center-related issues, including how utility rates for the sector are currently classified.
Thompson wrote,
As data centers continue to expand and contribute to our ever-growing demands on Arizona’s and the nation’s power infrastructure with their unique and large power needs, it’s important to balance the economic opportunities presented by data centers with the need to financially protect other ratepayers to ensure they are not bearing the rising energy generation and transmission costs associated with this burgeoning industry,
In a statement, Thompson said he believes “the data center industry is paying its fair share of expansion of power generation and infrastructure under existing utility rate structures.”
Others question whether that’s the case, though, as energy-hungry data centers flock to Arizona.
Consumer watchdog Abhay Padgaonkar wrote in an op-ed in the Arizona Mirror,
Worse yet, the commission has ignored the real culprit behind the hypergrowth: the uncontrolled proliferation of noisy, power-hungry data centers.
“These 24/7, extra-high-load monstrosities are draining the power grid and can increase household energy bills while negatively affecting environmental quality,”
Padgaonkar criticized the Corporation Commission for approving an APS rate hike last year and approving a surcharge on customers with solar panels on their homes, arguing those panels actually decrease stress on the electric grid and reduce the need to invest in expensive new infrastructure.
APS’ parent company reported that data center growth was a main driver in the sales growth the utility experienced last year despite “weaker usage among residential customers, energy savings driven by customer conservation, energy efficiency, and distributed renewable energy initiatives.”
According to Pinnacle West Capital Corporation’s annual report for 2024,
The main drivers of positive sales for this period were continued strong sales to commercial and industrial customers and the ramp-up of new data center and large manufacturing customers,
According to 12 News, APS’ own 2023 resource plan projected that extra high-load customers, which includes data centers, was expected to grow by 391% over two years.
The Corporation Commission approved an APS rate hike that went into effect in March 2024 that increased bills for residential users by about 8%. Large and extra large commercial users saw their rates increase between 3.4% to 6.4%.
Utility Dive, a publication covering the utility industry, reported that APS Senior Vice President Jose Esparza told attendees at the National Association of Regulatory Utility Commissioners’ annual meeting last year that APS had pending requests from data centers it couldn’t fulfill because it would negatively impact existing customers. He said the utility is also concerned about spreading costs associated with data centers to residential customers.
EDITOR’S NOTE: The story has been updated to correct the name of the publication Utility Dive.
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Arizona regulators to study data centers impact on electric grid, source
